Eurolife losers counting the cost

THEY once hosted lavish parties for finance industry bigwigs in the Chamber of Horrors at Madame Tussauds waxworks museum in London.

But for investors in Lynne Green and David Wootton's Eurolife group, the nightmare was all too real.

While Green and the pony-tailed Wootton enjoyed the high life, jetting round the world tending to their far-flung business empire, thousands of their clients lost small fortunes on high-income and 'precipice' bonds.

These investments were meant to be low-risk, but many were linked to the performance of an extremely volatile stock market.

The Financial Services Authority stopped part of Eurolife doing business after it decided, among other things, that money raised by an investment bond issue was being used to pay off losses in a Gibraltar-based subsidiary.

These allegations are denied by Green and Wootton and, because of a settlement with the regulator, they were never tested before a tribunal. The company was also forced to ring-fence funds to protect investors' money.

Last November, Green and Wootton agreed to step down as directors of the subsidiary Eurolife Assurance Company after a two-year FSA inquiry, but they remain the controlling shareholders in a group that spans more than a dozen firms.

Indeed, a casual visitor to the company's website could think that the pair were still in charge of the group.

Certainly, Eurolife's founders continue to enjoy the good life. Green has a superb mansion on a millionaires' row in Broadstairs, Kent, and a reputation as a bon vivant. 'Green was a stick of dynamite,' recalls one industry figure. 'She knows how to have a good time and she likes to make sure others are having fun too.'

Another leading figure in the sector remembers her as 'the woman who won't take a bath unless the tub has gold taps'.

Green, a former shorthand typist, used to joke about buying champagne for clients in strip clubs in the days when pubs shut in the daytime. It was, she said, difficult to find somewhere to have a drink.

She also appears to have had difficulty telling the difference between her clients and friends.

Eurolife's 2002 accounts reveal: 'The company made a non-interest bearing loan to LM Green in respect of personal expenses incurred and initially paid by the company in contravention of section 330 of the Companies Act 1985.' The expenses error amounted to £37,801.

And some of the commissions made on selling Eurolife's investments were used to pay the £6.5m in salaries that directors of the parent company received over the last five years.

Not that Green was not a hard worker. An industry analyst recalled: 'She told me that she and Wootton kept duvets in a cupboard at the office so they could keep working without worrying about going home.'

The products created by Eurolife had an especially poor reputation with Ian Lowes of leading independent financial adviser Lowes Financial Management.

Lowes warned Financial Mail on Sunday about one of Eurolife's bonds: 'Avoid these at all costs.' Alas, for many the warning came too late. More recently, Green has been ill, close friends say. 'She has been bruised by the experience of the FSA investigation,' says one.

'She felt it was harsh and believes in her heart that she was running the business honestly. This has changed her but I hope she's not been changed too much.'

Wootton is also adamant that the company did no wrong. 'If the FSA could prove it, they would not have settled with us,' he said.

Wootton pointed out that the settlement is very precise, banning the two directors from one company, rather than the entire group.

'I am very concerned at the suggestion that there is a connection between investment returns that have been affected by worldwide stock market performance and the remuneration of either Mrs Green or myself,' he said.

And he argues that because the FSA did not fine them and agreed to drop its action on the eve of the tribunal hearing, it indicates that the watchdog had trumped up the charges against them.

'We only offered to settle to limit our ongoing legal and professional costs,' he said.

Wootton insisted that the verdict vindicated Eurolife, which now also uses the 'nvesta' brand name. Out-of-pocket investors may be less certain.